Arnold Kling

Accounting after Enron

Arnold Kling, Great Questions of Economics
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Hal Varian points out that more transparent accounting is necessary.

A venture capitalist I know once complained that "the S.E.C. only sees options as an expense, whereas we see a powerful incentive mechanism." Well, if that's true, then companies should want to brag about what great incentives they have in bold type at the front of their corporate report, not hidden in footnotes at the back.

Varian's sensible position contrasts with those of John Doerr and T.J. Rodgers.

Discussion Question. If Silicon Valley's prosperity depends on the ability to hide employee stock options in footnotes, how durable is that prosperity?

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